Debit Interchange Fight Sparks Battle of Big Spenders

That’s the landscape as the retail and financial service industries duke it out over attempts to regulate debit interchange fees.

In 2010, credit unions and commercial banks spent $67 million to lobby Congress. Commercial banks spent $56.7 million and credit unions doled out $9.3 million, according to the Center for Responsive Politics.

The retail industry spent $40.2 million to lobby Congress last year.

That largesse, coupled with the fact that both industries employ many people in every state and congressional district, have made lawmakers reluctant to choose sides.

Most of the lobbying didn’t deal with interchange.

The financial services sector had a lot on its plate in trying to influence the Dodd-Frank regulatory overhaul bill. For credit unions, much of the effort centered on minimizing the impact of the new Bureau of Consumer Financial Protection. They and the community banks successfully fought to exempt financial institutions with assets of less than $10 billion from being subject to direct examination by the bureau. NAFCU pushed hard to have credit unions be completely exempt from the bureau’s rules.

The interchange component only factored in toward the end when Assistant Majority Leader Richard Durbin (D-Ill.) introduced the amendment.

CUNA spent $6.5 million on lobbying, the most of any credit union entity. NAFCU was second with $2.1 million, and Pentagon FCU was third with $260,000.

Those expenditures range from the cost of supplying witnesses for hearings to some of the salaries for staff members who do the lobbying.

On the banking side, the American Bankers Association and JPMorgan Chase each spent $7.4 million. Wells Fargo spent $5.4 million; Citigroup spent $5.3 million and the Independent Community Bankers of America spent $4.5 million.

The regulatory overhaul didn’t impact the retailers until the debit interchange issue came in. The biggest expenditures were CVS, Walmart and Target, which spent $8.9 million, $6 million and $2.8 million, respectively.

Among the retail trade groups, the big spenders were the National Association of Convenience Store Operators and the National Retail Federation, which spent $2.7 million and $2.6 million, respectively.

During the 2010 campaign, the political action committees of banks, credit unions, retailers and their trade associations gave extensively to federal candidates as well.

Credit union PACs gave $2.8 million, 57% to Democrats and 43% to Republicans.

Commercial bank PACs gave $8.9 million, 61% to Republicans and 39% to Democrats.

Retail political action committees gave $6 million to federal candidates, 56% to Republicans and 43% to Democrats.

Durbin, because he is a member of the leadership, has received contributions from banks, credit unions and retailers.

From 2005-2010, he received $196,375 from individuals and PACs related to commercial banking, his 11th largest donor group. He received $85,350 from individuals and PACs tied to retail sales, his 26th largest group.

During that time, CUNA’s PAC gave his campaign $10,000, and NAFCU’s PAC gave it $2,500.

Lawmakers in the House and Senate are still pushing legislation that would delay the implementation of the Federal Reserve’s rule regulating debit interchange fees.

Last month, Federal Reserve Chairman Ben Bernanke said the agency wouldn’t be able to release the final rule by the April 21 deadline. He cited the large number of comment letters as one reason.